AUD/USD Price Forecast: Aussie Pulls Back from 12-Week High, But Bulls Remain in Control

The Australian dollar traded modestly lower on Monday, with the spot rate changing hands around 0.71606, retreating from Friday's 12-week high of 0.7180. Despite intraday pressure, the currency held onto most of its recent gains, with the broader bullish bias remaining intact. The brief decline triggered by soft Australian employment data has been fully absorbed, with market bulls regaining the upper hand.

**Near-term technical bias bullish, key resistance awaits breakout**

On the technical front, the 14-day Relative Strength Index is hovering near 67, which, while approaching overbought territory, remains constructive, and the MACD pattern above the zero line further validates the near-term bullish outlook. The pair has confirmed a breakout above the 61.8% Fibonacci retracement of the May-June decline, with this level around 0.7119 now providing initial support. Stronger resistance to the upside sits near the 78.6% retracement at 0.7188, a level that capped the advance on Friday. A sustained close above this resistance will be key to opening up the next leg of upside.

**Weak dollar and risk appetite provide support**

The U.S. dollar is hovering near three-month lows as expectations of an imminent Federal Reserve rate hike cool, which has become a core factor underpinning the Australian dollar against the greenback. Meanwhile, bulls appear largely unfazed by geopolitical tensions, suggesting the path of least resistance for the pair remains to the upside. Analysts noted the Aussie is also benefiting from upbeat market risk sentiment.

**Central bank policy divergence in focus**

Looking ahead, the divergence in policy expectations between the Reserve Bank of Australia and the U.S. Federal Reserve will continue to drive the pair's direction. The RBA's monetary policy stance is more hawkish than markets had previously expected, while the dollar's rebound momentum remains weak, a backdrop that is expected to provide sustained support for the Australian dollar over the medium term.